The Next Economic Paradigm

Tag: reciprocity

Model For The Mobility of Engineering Professionals Under NAFTA

I published the following paper in 1996 as part of my participation in the negotiations for mutual recognition of Engineering Professionals under NAFTA.  We had just completed a program that ultimately sent close to 200 Mexican Engineers to the U.S. NCEES Engineering Board Exams with the support of CETYS Universidad and The State of California BORPELS.  In short, the performance of Mexican Engineers on this exam was extraordinary.  Their pass ratio was comparable in every way (especially when language disparity was removed), to US engineers who took the same exams.

Model For The Mobility of Engineering Professionals Under NAFTA – Please follow this link for PDF: INCNE596

This work is highly significant because it represents original research toward what was likely one of the first modern attempts to trade ‘human knowledge’ like a financial instrument.  The idea was that Mexican, American, and Canadian Engineers would be allowed to practice engineering in the exchange of services across all three borders.  The hope was that the financial structure that supported the American and Canadian engineering profession as a vetting mechanism [for the technical risks details associated with major infrastructure projects] would transfer into Mexico.

Comparative Education

It is also significant because this may be one of the largest comparative education projects between the Mexican Education system in Engineering and the US engineering education system as measured by an established standard examination.  For example, data clearly showed an advantage in Mathematics for the Mexican engineers but a disadvantage in physics and chemistry – likely correlating to the cost of producing such education (labs and equipment) between the two systems.

Relative States of Development

It is abundantly conclusive that Mexican Engineers, and therefore the Country of Mexico, is highly capable of development and technology enterprise based on the education criteria in which America measures itself.    So when looking at the relative states of development between the two countries, the question arises; if the difference is not in the quality of engineers, then where is it? Of course, the answer does not surprise us when we see political turmoil as the source of most wealth disparity metrics.

Language Disparity

Finally, on a relatively minor discovery, this research measured a language disparity of approximately 15% in the speed that the engineer from Northern Mexico can accurately interpret an engineering problem expressed in technical English.  This is useful when planning timed exercises such as examinations where language differences are difficult to remove from the sample set.

Epic Value Game FAIL

As it turned out, the Mexican Negotiators did not accept the author’s recommendations presented here in stead adopting an MRD strategy that was highly restrictive to both the mobility of engineers and the vetting requirements of financial institutions. America literally handed Mexico the Knowledge Economy on a silver platter and Mexico refused.

This author argued in 1996 that Mexico would compete in the future with emerging economies such as China and Vietnam in the the low-value labor market rather than competing with, say, India for the highly valued knowledge market.   It is unfortunate that they chose the former.  I’ll leave my opinions as to why, for a future post.

Model For The Mobility of Engineering Professionals Under NAFTA

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Do the Laws of Persuation Hold in Social Media?

 

Anyone who has ever shopped for a car is familiar with the tried and true negotiation methods.  With the advent of social media, negotiations are happening more and more in social space and in combination with in-person events.

Time pressures, price pressures, asymmetric information, location, vetting, and abundance of alternate solutions are breaking the rules of negotiating.  Meanwhile, retribution for deals gone wrong has swung in favor of the consumer.  Here is a list of methods sourced from Robert Cialdini for negotiating and a few point about how things have changed.

1. Law of Advocacy; Introduce a third party: a salesperson can tell a prospect he “needs to talk to the manager” From that point forward, the prospect views the salesperson as an advocate.

People don’t need an advocate. Social media provides a written record of a past transaction as well as a snapshot of supply and demand in a market. People check FB while salesperson is off checking with manager. Customers have checked prices elsewhere and are only calculating the cost of time to scroll down the street for the deal they want.

2. Law of Urgency: Top negotiators create a sense of urgency by specifying which terms they’re willing to agree to, then setting a firm deadline, after which the deal is off the table.

Twitter sets a new standard for urgency.  Cause and effect are reversed as people respond to social media news to initiate the process.  “Off the table” means off the screen and on to the next vendor.  Next prospect is warned not to fall for the urgency trick.

3. Law of Authority: Using statistics to establish why you offer the best value on the market. It’s a way of saying, “You have more to lose here than I do.

Facts are increasingly easy to check. Undisclosed facts are easy to discover. Statistics can be read many ways in social media. Is the negotiator ready to be accused of warming the planet more than the next guy?

4. Law of Social Proof: Credibility is king in negotiations. Presenting testimonials from best-in-class companies lets prospects know the best in the business choose to do business with you.

Some references may in fact be liabilities.  Best in class companies (such as Whole Foods Market) can get in trouble real quick.  Is the negotiator ready to keep this list “twitter ready”?  Testimonials come from the bloggers, not the PR department. Ouch.

5. Law of Reciprocity: Shrewd negotiators establish a quid-pro-quo early on, so prospects understand it works both ways.

What can a negotiator offer in an environment where the customer has the same information they do? The customer is more able to put a fair market value on the “quid” thereby eliminating any arbitrage advantage.

6. Law of Commitment and Consistency: By getting the other party to agree to the “no brainer” terms gets them in the habit of saying “yes” and they are less likely to say “No” to a deal that is 99% done.

Customer is more empowered to say “no” to the terms that matter.  They have studied the case studies of others who have gone down the same path. Social interaction is desensitized especially of the negotiator does not appear to be tech savvy – commitment and consistency is easily lost.

Traditionally the negotiation process starts in the advertising campaign.  Get it?

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